City firms shrug off Brexit impact

The financial services industry has not been hit as hard by Brexit as many expected with warnings of job losses and staff relocations not having yet materialised, a new report from EY finds.

Research by the consultancy giant, which tracked every public statement made by 232 different financial firms, found that the repercussions of Brexit has not been as bad as initially feared, reports City AM.

The report found that one in five of the largest investment banks have warned of a negative impact of Brexit, while a quarter made a commitment to stay in the UK.

The report stated: “The immediate impact of the referendum has not been as stark as many initially feared.”

Looking to insurance companies, 40 per cent of the UK’s leading firms said Brexit would not impact their business, while 10 per cent said it could lead to positive moves and new opportunities.

An area of concern raised in the report was the City’s passporting rights, with a quarter of the largest investment banks saying they would cut staff if they did not gain access to the single market.

EY UK financial services leader Omar Ali says: “It is reassuring to see that, two months after the vote, companies across the sector – particularly within the insurance community – seem broadly confident in the ability of their business to weather the initial storm.

“Indeed, the industry has responded with pragmatism, ingenuity, and day-to-day focus on serving its customers and some are beginning to highlight areas of opportunity.”

Oh they are so sanguine that they are trying to negotiate a special deal. Fund outflows have been mega – have they actually recovered yet?

After two months what do we know? Absolutely nothing. Thus far Brexit is an intention. We have yet to see what happens when Article 50 is triggered and then what sort of deals we will get after that.

Italy, France and Germany are meeting as I post this, to decide on how hard they are going to kick the UK. To quote a certain regulator “Be afraid, be very afraid”. Project fear lives! It is never wise just to look on the bright side. Assume the worst and anything else is then a bonus.

The risks for Europe are huge whichever way they play this. The UK is a vibrant and innovative country and will do fine whether inside or outside of Europe (I suspect we’ll do better if we are in the single market but it won’t be a disaster outside either). If the EU kicks the UK hard and we are still successful that could be an even bigger incentive to other member states to get out.

I suspect that this will end with the traditional EU fudge where we find ourselves in the EEA with a deal on immigration. The PM will be able to say that we have left the EU and the EU will be able to say to other nations that we never had the balls to really leave.

Everyone’s a winner and by the relaxed nature of the City and investment markets you can tell that those in the know think that this is what will happen.